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Jamaica's fuel cost Journey, 2020 to 2021.

Most people should be feeling the impact fuel cost have been having on their finances. Without a doubt this is driving inflation and impacting the cost of living. But how did it get here? 


World Oil Prices crashed in April 2020
For approximately two weeks between April 16 and May 1, 2020 US WTI Oil price traded for less than US$20/barrel.



WhatsApp status post querying the Jamaican government to buy an oil and gas hedge. April 16, 2020.

Government Response

 

  • Minister tasked the BoJ and MoF to review hedging options. - April 20, 2020.

https://mof.gov.jm/mof-media/media-centre/press/2643-statement-from-the-minister-of-finance-and-the-public-service-on-potential-oil-price-hedging.html

 

  • Finance Minister praises decision not to go ahead with oil hedging as prices hit record low.  - April 20, 2020.

http://radiojamaicanewsonline.com/local/finance-minister-praises-decision-not-to-go-ahead-with-oil-hedging-as-prices-hit-record-low

 

  • Jamaica decides against new oil hedge. - September 18, 2020.

https://jamaica-gleaner.com/article/business/20200918/jamaica-decides-against-new-oil-hedge

 Current World Oil Price


July 27, 2021 US WTI Oil price trades for over US$70/barrel. Between May 2020 and July 2021 WTI Oil prices have risen approximately 250%.
 
One can only imagine the potential savings that might have been had were a hedge option bought, and imagine just how that might have potentially contributed to the health sector in the current Covid-19 environment.
   
Jamaica's Exchange Rate Impact
















 

April 2020

June 2021

US$1

139.66

150.15

Dollar devalued by approximately 7.5%

Ex-Refinery Fuel Prices


















Fuel Type

April 16, 2020

July 22, 2021

Rate of increase (%)

Gasoline 87

119.73

153.35

28

Gasoline 90

122.57

161.71

32

Auto Diesel

116.96

143.90

23

When one considers just how much travelling one has to do this could truly be impactful on one's personal finances.

Caribbean Neighbor did it, so what's really behind Jamaica's decision?
   

IDB Partners with Bahamas to Launch New Oil Hedging Solution For BPL. - July 15, 2020

https://www.iadb.org/en/news/idb-partners-bahamas-launch-new-oil-hedging-solution-bpl



While all that has happened this is how the economy has turned out.

  • Total value added for the Jamaican economy grew by 0.6 per cent when compared to the fourth quarter of 2020.
  • Jamaican economy contracted by 6.7% year-on-year in the first quarter of 2021.
  • The economy declined by 11.0 per cent for the fiscal year 2020/2021 compared to fiscal year 2019/2020, reflecting the impact of COVID-19. 


Jamaica's GDP Growth 2020 to 2021 March.








International Merchandise Trade












Stay tuned and look out for more revelations on the economy, covid-19 and the environment.


 




 

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